TORONTO, Feb 25 (Reuters) - Small declines in home prices
and mortgage rates made Canadian home ownership slightly more
affordable in the fourth quarter of 2012, the second straight
improvement, and soft home buyer demand may help continue the
trend in 2013, according to a report by RBC Economics released
on Monday.

RBC, Canada's largest bank and a huge mortgage lender,
measures affordability as the percentage of monthly pre-tax
income for a household needed to cover the typical costs of
owning a home, including mortgage payments, utilities and
property taxes.

By that measure, the cost of owning a home edged down by 0.2
percentage point to 42.1 percent for a detached bungalow, by 0.3
percentage point to 47.8 percent for a two-story home, and by
0.2 percentage point to 28.0 percent for a condominium, the RBC
Housing Affordability index showed.

"Exceptionally low interest rates have been the key factor
keeping home affordability from reaching dangerous levels in
recent years," RBC chief economist Craig Wright said in a
statement.

"Residential property values are elevated in Canada and, for
many households, ownership remains accessible only because of
rock-bottom mortgage rates. It could be a different story if
interest rates were to move swiftly and significantly higher."
Continued...